Equity Release Advice
How Does Equity Release Work?
If you are over 55 and own your own home either outright or with most of the mortgage paid off, an equity release mortgage could enable you to use your property to supplement your finances.
A lifetime mortgage involves taking a type of mortgage that does not require monthly repayments, although with some plans rather than roll up the interest you can opt to make monthly repayments if you wish.
You retain ownership of your home and interest on the loan is rolled up (compounded). The loan and the rolled up interest is repaid by your estate when you either die or move into long term care.
If you are part of a couple, the repayment is not made until the last remaining person living in the home either dies or moves into care, meaning that both you and your partner are free to live in your home for the rest of your lives.
Please note, another form of Equity Release is Home Reversion, which we do not offer. This allows you to exchange the ownership of some or all of your property for a lump sum of cash; in addition to giving you the right to stay in your property, rent-free, for as long as you live subject to the lenders terms and conditions. This is also known as a ’lifetime lease’.
What Else Should I Consider?
The amount of money you borrow against the value of your home, plus any rolled-up interest, can never go above the value of the property – when it is sold at the end of your plan – due to the No Negative Equity Guarantee safeguard upheld by Equity Release Council members. You will continue benefitting from the rises in property value in the years to come.
There are fees to bear in mind, some of these may be payable upfront or later in the process. We will make you aware of these at outset, as these can include fees from the lender, solicitors and us as your adviser.
How Flexible Is Equity Release?
Modern equity release plans come with a wide range of options, and we aim to make later life lending accessible and easy to understand.
The borrowing can be either one lump sum, or a smaller lump followed by draw-downs of further sums.
The interest can typically be paid in full, or partially or left to roll up (compound).
The rate of interest will either be fixed or variable.
The fees are clearly stated at outset including redemption fees, these may be fixed or variable and your adviser will guide you on the most appropriate option.
Legal advice is required, and usually a solicitor will come and visit you at home, as can we as your advisers.
Who Are The Equity Release Council?
We have referenced the Equity Release Council on this page, and J Finance are proud to be members, as are all the lenders we work with.
The Equity Release Council represents the equity release sector and exists to promote high standards of conduct and practice in the provision of and advice on equity release which have consumer safeguards at its heart.
These standards and safeguards have allowed the sector to grow, giving financial advisers and their customers confidence in the products, dispelling myths about equity release, and educating the public about the potential to access the wealth in their home for a variety of uses.
Equity release can affect the future inheritance of your beneficiaries, not to mention your own finances.
Therefore, it is important that the best advice is sought due to the complexity and variations between all equity release schemes.